How a lucky trip to Vegas saved FedEx

Running a business seems tough at the best of times. FedEx these days is a multi-billion-dollar international shipping business that sends parcels around the world – but it wasn’t always like that. Fred Smith saved the business in 1974 by going to Las Vegas, and proving himself to be an inspiration for aspiring CEOs everywhere. Though Lucky Nugget have mentioned this before, here’s the story in full detail.

Risky business

FedEx was created from an idea Smith came up with as an undergraduate at Yale, as part of his economics degree, in 1962. He thought that sending urgent packages by plane could be more efficient than just shipping them by boats or road. (According to folklore, this paper got a C – though even Smith doesn’t remember if that’s true or not.) He decided to make good on his idea in 1971 and invested $4 million of his own wealth alongside $80 million in loans and equity investments to found Federal Express.

While initially the company excelled, fuel prices soon rose and caused problems. It wasn’t long before FedEx was losing $1 million per month, and investors refused to give Smith any money to bail out the business. The company couldn’t afford to fly their planes – and Smith only had $5,000 left in the company coffers.

That’s when he came up with an unorthodox plan to save his company.

Back-up plan

Smith did what any brave entrepreneur would do when faced with financial ruin: he emptied out the company funds and took a trip to Vegas.

Over the course of a single weekend, he managed to win $27,000 from his $5,000 bankroll. He came back to the business on the Monday morning and announced there was $32,000 now sat in the account. Smith had made a profit of 540% of his starting sum, and ended up with 6.4x what he’d started with.

Blackjack was the game of choice here, but even that only yields a 3:2 payout when you win a hand. In order to have gained so much money, Smith must have won – consistently – over a vast number of games, accruing money as he went. Assuming he staked $1000 on every hand, he would have made $1,500 from his first win, $3,000 after winning two, and so on – but every loss he had would have cut into the lifeblood of his company.

The average player can easily lose all their funds while playing blackjack through bad luck or bad strategy. There’s nothing to indicate that Smith was an expert player, or indeed had ever won large sums of money playing blackjack before: he probably just spent a weekend getting very lucky, saving his business in the process.

When asked about it at the time, Smith reportedly shrugged and said, “What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.”

If you want to try your luck, then why not play online blackjack at Lucky Nugget today? We can’t promise that we’ll save a failing company – but who knows. Maybe, like Fred Smith, you too might get lucky enough to win five times your bankroll.

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